What Keeps Google Up At Night

Forbes National Editor Quentin Hardy spoke with Marissa Mayer,
Google
's vice president for search products and user experience and one of the first dozen employees of the company, about how
Google
has disrupted other businesses--and what they are doing to keep their No. 1 spot.

Forbes: Let's start with how
Google
has been disruptive to industry as a whole--for the Internet, for advertising. What do you think the great effects of Google have been on the economy and on business?

Marissa Mayer: There's been a huge amount of data that's been able to come online. So, offline content coming online, fueled by AdSense. A lot of businesses have been able to sell over the Internet, using Google AdWords to get new customers. So, there have been a lot of start-ups and publisher content that's become monetized by Google and really made into buyable businesses.

We're really proud of a lot of the businesses that we've helped people build and create. Even more than that, we're really proud of how we've helped users access information--information that really matters to them and in their lives.

You were more or less present at the creation [of Google], correct?

It was about nine months later, but yeah.

Close enough. There really was no revenue model, per se. At what point did you all realize how important advertising was going to be? And ... when did you realize just how big a deal this would be for the business of advertising?

I was assigned to advertising on my first day at Google. When I arrived,. I was, say, the 10th or 11th engineer. And another guy named Paul Buchheit showed up the same day. And they basically said, 'You two should work as a pair. One of you should work on advertising. One of you should work on product search.' Like, Marissa do advertising, Paul do product search, cross-check each other's work. Go.

Then when I started talking to [Google co-founders] Larry Page and Sergey Brin about advertising, they basically said: 'This is how we've always believed the search engine would be monetized. Because we believe that an ad can be a great search result. And search results and ads could compliment each other really well.'

We didn't know exactly how those ads should work. Should there be new text written for every ad? Should it be a display? We looked at how could we target ads: How could we make sure they were relevant? Should we sell them by category? Should we sell them by keyword? What should that overall model be? Should they be sold based on CPMs, cost per thousand impressions? Or should they be sold CPC-based--namely cost per click? based on how they performed.

We really had to feel our way through all of those questions. But Larry and Sergey, from the very beginning, were convinced that advertising was something very complementary to search and the right way to monetize it.

At what point did you realize just how impactful all this would be?

Overall--when we saw that we could achieve profitability. When we could see that our ads and some of our syndication deals could actually cause a shift in business models. Where instead of, say, one of the portals paying us to provide their search, we could go to them and say, 'We'll provide your search and we'll provide the ads alongside it. And we'll generate enough revenue from that that we can actually cause money to flow back to you as part of that revenue share.'

Instead of search being a cost to their business, search was actually a moneymaker for their business. When that balance tipped, it was a real turning point for us. When we thought, 'You know, we're really onto something here. This makes a lot of--'

That's the definition of disruption right there: A meaningful event that changes behavior permanently. And pretty soon you found people behaving differently around what Google was doing, correct?

In the business aspect, definitely. Because people saw that search was a moneymaker. And you could add search to your site. You could get the search advertising revenue as part of a revenue share. As opposed to being a cost for your business, it was actually something that could generate profit and revenue.

What have been some of the important breakthroughs in the life of Google, as you've been here?

There's a lot, because we've done a lot of different things. Obviously coming out of beta in the fall of 1999 with the search engine was a big piece of it. That was a really big deal. We had a few large partner deals along the way that were very helpful. The
Yahoo
deal, the AOL deal.

And then really spanning into new areas: Client software, the Google toolbar and then the Google desktop and now Google Chrome. Getting into the application space. First with Gmail, then with the calendar and now with docs and spreadsheets. Into the social space with Orkut. And then into thinking about, well, how does the social space interact with photos? Because we saw that that was one of the big activities happening at Orkut and looking at Picasa. And how could we bring Picasa to the Web so it, too, is functioning in the cloud.

And then the overall evolution of search. Not only did we bring search out of beta but we went on to introduce lots of new features: Related links. You know, adding and improving the overall advertisements. Bringing personalized search to be part of it. Lots and lots of small change along the way.

A really watershed change came about with universal search in 2007. By that point we had built lots of independent search engines [for different function]: the Web, images, news and so on. You had to decide which search engine you were going to use beforehand. Universal search really brought that all together. [It was like saying] 'We're not going to expect you to have a mental map of our entire product line. Type what you want into the box and we'll bring it to you.'

You refined the brand to just speak to all of these areas at once.

Exactly.

Now, this is a very data driven company. What tells you you're onto something that's a breakthrough? Is it the speed at which people pick things up? Is it the way in which they are willing to change their behavior to accommodate this new event? What's a good signal that something different is going on?

Adoption and changes in user behavior are the things that we look at most. If we put a new product out on the 'labs' section of our site or the site generally, we're looking at what kind of adoption and usage patterns we see immediately. Then there's growth. One of the most interesting factors that we'll look at is how much does something grow? How much does it grow month after month? On the Web, things should double. If things are going to double, they need to be growing like double-digit percentages every month.

They should double over what scale?

If it's a very hot small product doubling every month, that's maybe doing a million [page views]. If you're trying to grow into [something like] YouTube, you're doing a million page views today--and you need to be doubling. And you need to be doubling every few months for the next few years, right? So, we look at the overall growth trends.

We also look at behavior around different features. So, when we find something new that might be a more incremental feature ad, we look at how do users use it. Does their overall behavior seem happier or less happy? So, we're not just saying, 'Well, we put a new link on the search results page, did people click it?' We're also look at whether they did more or less searching after that click--so we can see sort of macro happiness.

In other words, you're asking: Did it change the way that they're thinking about things further down the line?

Exactly.

So the behavior afterward starts to matter a lot. And so you're asking: Did they come back to it a second or third time?

Yeah.

So, the interaction matters a lot. You measure it over a time frame.

Yes.

What do you think could or will disrupt Google itself?

There are all kinds of possible disruptions. Fundamentally disruption is about innovation. And we've worked very hard here to disrupt ourselves--to really be a hotbed for innovation. So we're as likely to disrupt ourselves as we are to see a disruption from the outside.

Give me an example of that. What have you done to disrupt yourself?

Well, it's interesting. For example, in search, once a year, we have something called 'demo days.' It's where we ask everyone to stop working on their projects and basically do a prototype version of brainstorming for a week. They work on small things, they build their best idea in a prototype form. So we can see sort of what would be cool and new and interesting.

And we look at the communications products. There's Gmail and there's Wave, right? There's a world where they may converge and have a lot of similarities. But basically we're currently saying, 'You know what? We're not sure. Maybe e-mail stays like e-mail, or maybe it moves into this much more amorphous communication tool.'

It's interesting to ask those questions, to challenge those assumptions and then see what happens with those product lines over time. We're not afraid to really ask the hard questions and say, 'Well, maybe this product that's a mainstay right now takes on a very different form in five to 10 years.'

What do you worry about more:
Microsoft
or two guys in a garage you can't see?

Both. Microsoft is a very formidable competitor. They're--

They have a lot of money, they don't stop and they are smart guys.

They're the largest competitor in our space. And they need to be taken seriously. They're working very hard on search. But two guys in a garage could have a great idea. And on the Internet, things do grow really quickly and can really reach scale in a very short time span. So you need to be paying attention to all those factors.

What about governments?

Obviously governments and policy play a big part in what we do because our mission is to organize the world's information and provide access to it. Governments play a big role in what information can you get access to and what can you provide for users.

As the SF-based National Editor at Forbes, I write a lot about tech, but am interested in a lots of different people and markets. I've done covers on Google, HP, Wireless, Africa, Philanthropy, Yahoo, and the Canadian dope industry. I was at The Wall Street Journal, covering...